Insurance for Technology Firms
Looking for Technology Business Insurance?
Whether you’re a start-up tech business looking for insurance the first time around or you’re an established firm looking for options on your next renewal, there are several issues to consider that we discuss in this video. The key points you should be thinking of when it comes to buying business insurance for a technology firm are:
- You have some unique risks over many “traditional” types of businesses so addressing these risks accurately is critical.
- You may love the idea of a human-less technology-enabled buying process that’s fast and easy, but often these platforms produce less than stellar results.
- Be strategic. Contrary to popular thinking, engaging multiple brokers to get quotes will NOT return the best results in terms of price or coverage. Shop for a broker you feel comfortable with, and then let that broker shop the marketplace for you.
- Be prepared. Underwriting for technology business insurance can be a little intimidating. There’s going to be a lot of information needed so set time aside for completing applications and have financial information ready as it’s needed.
What’s in a Technology Business Insurance Program?
The core policies within a Technology business insurance program will often include:
- Technology E&O or Errors and Omissions Insurance. This policy will protect you from expensive lawsuits alleging that a failure or glitch in your product or service caused them some form of financial damage.
- Cyber Insurance to protect you, your data, and your systems from hacking and breaches.
- General Liability to protect the company from bodily injury or property damage claims on your premises. Some insurers will bundle these three policies; Tech E&O, Cyber and General Liability into one package.
- Property insurance protects your business, personal property, and business income.
- Workers Compensation to protect your employees from on the job injuries.
- D&O Insurance or Directors and Officers Liability Insurance. This is particularly important for firms that are funded or will be seeking funding or have a board of directors/advisors. D&O protects company decision makers from very expensive lawsuits that allege a “wrongful act” in managing the affairs of the company. Potential board members often will not sit on your board, without this protection.
- Employment Practice Liability Insurance (EPLI) to protect the company’s leadership from claims alleging wrongful employment acts such as harassment, discrimination, wrongful termination and more.
- There are other specialty forms of coverage used in different technology companies including: IP Insurance, Product Recall, and Clinical Trials Insurance for Biotech firms.
What Types of Technology Companies Do We Work With?
- Software Development
- SaaS Providers
- Life Sciences – Biotech, nutraceutical, pharma
- Social Platforms
- Sales Technology
- Clean / Green Tech
- Electronics & Hardware Manufacturers
- Medical Device Manufacturers
- IT Consultants / Managed Service Providers / Managed Security Solution Providers
- Integrated Tech Solution Contractors
Why Technology Companies Need Business Insurance.
Technology firms can face a tremendous variety of risk issues that need to be addressed to avoid crippling lawsuits, expensive damages to hardware and software and product in development, and loss of business income. Let’s take a look at just two of the insurance elements here in more detail:
- Technology E&O is the foundation of most tech firm’s insurance programs. This policy protects your company if your technology product or service does not perform as intended, or fails, and it causes your customers or other third parties to suffer financial damages.
These types of claims can be triggered by damages to one customer or potentially many/all customers at the same time, so the potential financial consequences can be huge. Having the right E&O insurance with the right limits of protection is critically important to protecting the company from these types of claims.
- Cyber Insurance – While every small and medium sized business needs cyber insurance to protect themselves from ransomware attacks, malicious hacks and other nefarious acts by threat actors, Technology companies face a unique risk here. That is your product or service is most likely in the form of code or information stored, managed, and produced in the cloud. It may even be shared on multiple devices as well at the same time.
What would happen if a ransomware attack seized all of your digital assets, all of your media, all of your backups within an instant and all your code was out of reach. What if the hackers knew what that data was worth and held it for ransom to the tune of $3 million or $10 million? What would you do? How would you respond?
Hackers have breached some of the most secure banks and other companies the world over. Your network could be next, so Cyber Insurance is a “must have” form of protection for all tech firms.
What is the Best Insurance for Technology Companies?
Due to the variety of types of technology companies there are, there is no one “best” insurance policy or insurance company to look to. Even within a particular niche of the technology sector it’s difficult to say “this policy” or “this insurer” is best.
For that reason, you’ve got to think customization and specialization, and that’s where The Coyle Group excels at insuring tech. We take the time to understand your needs and risk issues and then gather the data we’ll need to go to the insurance marketplace and leave no stone unturned to find you the right and best insurance program for your technology company, large or small.
What is Technology E&O or Errors & Omissions Insurance?
The terms E&O, Errors & Omissions and Professional Liability Insurance can be used interchangeably in the insurance business and for technology firms these terms all mean the same thing.
In the technology world, this coverage form is often called Tech E&O and it protects a technology firm from claims which may arise alleging an error or malfunction in the product or service that causes financial damages to a third party. Often that third party is a customer or user of the product or service.
Like other Errors & Omissions policy forms, the Tech E&O policy excludes claims which come from Bodily Injury or Property Damage situations which require General Liability Insurance to be carried by the tech firm for protection from these hazards.
Now, it may be difficult to wrap your head around liability claims that don’t involve bodily injury or property damage, so you question the need for Tech E&O.
To simplify it, Tech E&O covers claims where financial damages are the damages being claimed. Regardless of the product or service a technology firm sells or provides if an error, glitch, or malfunction occurs it could trigger the user (usually a customer) to suffer financial loss. Here are some examples:
- Data could be damaged or destroyed causing serious harm;
- Delays or missed deadlines can disrupt a user’s business operations and cash flow resulting in business interruption and lost profit claims;
- Failing to meet contractual obligations can result in financial damage claims;
- Errors in code or bugs can lead to malfunctions and problems for clients;
- For hardware manufacturers the failure of parts or code within a device can lead to serious claims;
- Copyright Infringement is another common claim where a tech firm is accused of stealing or encroaching another’s code or work product.
How much does Technology Business Insurance Cost?
The cost of business insurance for Technology Companies is going to vary wildly from one company to the next due to the different risk factors in one type of firm over another. A small software development firm will pay considerably less than say a more established biotech development firm with a pipeline of therapeutics in the works.
Be very cautious of websites that say that costs are $60 a month or most policies run $50 to $100 a month. These are foolish numbers to post online because they fail to recognize the differences between tech firm types and sizes.
- The factors that go into pricing Tech E&O include:
- The type of technology product or service you have or developing.
- The revenue size, or funding level of the company for a pre-rev firm.
- Employee headcount.
- The claim history of the company.
- The limits of coverage you’re purchasing.
- The retention or deductible you choose.
Why Get Business Insurance for Your Tech Firm Through The Coyle Group?
As a boutique insurance brokerage focused exclusively on business insurance, we’ve developed a laser focus and deep domain expertise in a handful of business verticals. One of which is technology. We also represent the top insurers that focus on technology companies as well, so when you work with us you’re assured that no stone is left unturned to find the best combination of coverage and price.
We recognize that you have a ton of choices when it comes to selecting an insurance broker to protect your technology firm, so let me give you four reasons why we think The Coyle Group is the right choice:
- Skill and knowledge – we are well experienced in the tech space. A generalist type insurance broker probably doesn’t have the depth of knowledge we have in the different types of tech firms, policy forms, and programs the market has to offer.
- Anyone can procure a policy, we go beyond just the purchase of insurance to help our clients manage risk and stay informed or risk and compliance issues.
- We represent the top national insurers focused on writing tech accounts.
- Our team of experienced and friendly account managers are here for you. Professionals you can develop a relationship with and you can rely on day in and day out. That’s something you don’t get with a big insurance company call center.
In my opinion, The Coyle Group does very well for our clients and we’d love an opportunity to speak to you about your insurance issues and what’s most important to you when it comes to business insurance.
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